As part of the Higher Education Amendments of 1998, Congress passed regulations governing what must happen to Title IV (federal) financial aid when students completely withdraw from courses during the semester. Title IV funds disbursed in excess of the earned amount must be returned to the federal government by the college and/or the student. A student could owe these funds to the college, the federal government, or both.

The Return of Title IV Financial Aid Policy applies once the semester begins to all students withdrawing or taking a leave of absence for any reason, including disciplinary action. If a student withdraws or takes a leave of absence before the first day of classes for a semester, all charges and financial aid for that semester are canceled. If a student withdraws or takes a leave of absence on or after the first day of classes for a semester, charges will be reduced and aid will be recalculated in accordance with this policy. 

Date of Withdrawal

The Dean of Student Development determines the date of official withdrawal and notifies the Financial Aid Office, as well as other offices who need to know of the withdrawal. If a student did not begin the official withdrawal process or provide notification of his or her intent to withdraw, the date of the institution’s determination that the student withdrew is the last date of academic activity or the 50% mark in the term. These withdrawal dates, whether official or unofficial are used as the withdrawal dates in calculating the Return of Title IV federal funds.

Federal Calculations

A student who receives federal financial aid (Federal Pell, Federal SEOG, Federal Direct Loans (subsidized or unsubsidized), Federal Perkins or Federal Direct PLUS funding) and who leaves Kenyon before completing 60 percent of the semester will have federal financial aid eligibility recalculated on a pro-rata basis. To make this calculation, we divide the number of calendar days the student has attended classes by the number of calendar days in the semester (minus any scheduled breaks of 5 days or more). The resulting percentage is multiplied by the amount of federal funds disbursed, or eligible to be disbursed to the student’s account to determine the amount of federal funds the student is eligible for, and what funds need to be returned.

Federal Title IV Student Aid fund(s) will be returned to the appropriate program(s) according to federal regulation. Currently, federal regulations require "unearned" Federal Title IV funds (excluding Federal College Work-Study funds) to be returned on a pro-rata basis when a student withdraws. For example, if a student who has received Federal Title IV aid withdraws and 30 percent of the semester is completed, then 70 percent of his/her federal aid is "unearned" and must be returned. Funds returned to the federal government are used to reimburse individual federal programs, and must be returned as soon as possible after the withdrawal but no later than 45 days after the date of withdrawal. Aid is returned to federal programs in the following order, up to the net amount disbursed from each source:

  1. Federal Unsubsidized Direct Loan
  2. Federal Subsidized Direct Loan
  3. Federal Perkins Loan
  4. Federal Direct PLUS (Parent) Loan or Grad PLUS Loan
  5. Federal Pell Grant
  6. Federal Supplemental Educational Opportunity Grant (FSEOG)
  7. Other Federal Loan or Grant Assistance

When calculating the amount of Federal Title IV aid which is "earned," we divide the number of calendar days the student has attended classes by the number of calendar days between the first day of classes and the last day of exams, excluding scheduled breaks of five days or longer during which no classes, exams or reading days are held. That percentage is then multiplied by the total federal funds that the student was eligible for in that period of enrollment to determine how much federal aid the student is eligible for. The rest of the federal aid is considered “unearned.” If a student withdraws after 60 percent of the semester is completed, Federal Title IV aid is not returned to federal financial aid programs.

Post-withdrawal Disbursement

If the student receives less federal student aid than the amount earned, the school must offer a disbursement of the earned aid that was not received. In other words, if all requirements for eligibility of a federal loan or grant program had been met but the aid had not yet disbursed at the time of the student’s withdrawal, the student may be eligible for a disbursement of federal aid after withdrawal. Any Federal Pell grant funds that were earned, but not yet applied to the student’s account may be applied to the student’s tuition charges without written authorization from the student. In order to have federal loan funds applied to the account that were earned, but not yet disbursed, the school must get authorization from the student (in cases of Federal Direct Loans or Federal Perkins loans) or the parent (in cases of Federal Direct PLUS loans). An authorization form must be sent from the school to the student/parent with 30 days of withdrawal if the student is eligible for a post-withdrawal disbursement, and the school has 180 days to disburse the federal Direct Loan funds or Federal Direct PLUS Loan funds.